Capital and maintenance on divorce

There is no matrimonial property regime in England and Wales. On divorce, the parties have to make full disclosure of all their assets, wherever and however held. Section 25 of the Matrimonial Causes Act 1973 (as amended) lists 'matters to which the court is to have regard in deciding how to exercise its powers' and first consideration is to be given to the welfare of the children of the family. The court has wide discretion to make whatever order is fair and possesses extensive powers to distribute all assets of the parties, including premarital assets, inherited assets, assets held in trust, offshore assets, business assets, pensions and bonuses. It can make orders for the payment of a lump sum, transfer of property, maintenance (known as periodical payments) for a spouse (these can be for a term or joint lives orders) and children (although the Child Maintenance Service has a role here), and orders for the variation of trusts classified as nuptial settlements.

In the case of Miller and McFarlane [2006] UKHL 24, the House of Lords identified three strands of fairness: needs (of the parties and the children), sharing (of assets) and compensation (of relationship-generated disadvantages). In most cases, the assets do not exceed the needs, in which case needs will be the determining factor and the other strands of fairness will be irrelevant.

Prenuptial agreements

For those keen to lessen the magnitude of an award in this jurisdiction, where the starting point for division is 50:50 (unless there are good reasons otherwise), a prenuptial agreement (PNA) is becoming an increasingly popular option.

While PNAs are not enforceable as a contract, the attitude of the English and Welsh courts towards them has changed considerably over the years and, following the Supreme Court decision in Radmacher v Granatino [2010] UKSC 42 , great weight will now be given to a PNA, unless the terms are manifestly unfair. For the PNA to have the best chance of being upheld, there should be proper disclosure, independent legal advice for both parties and suitable provision for a spouse and any children of the marriage. Supply of signatures at least 28 days prior to the wedding is also advised. In terms of the provision made, contracting out of the sharing concept of fairness is more likely to be acceptable than contracting out of the strands of needs and compensation. Catering for needs means providing appropriate accommodation, the right level of income (or capitalised income) or pension provision, if appropriate. This will be influenced by the standard of living enjoyed during the marriage.

Succession

In England and Wales, there is freedom of testation and there are no reserved/mandatory portions for surviving spouses.

In case of intestacy, the spouse will inherit according to s46 Administration of Estates Act 1925. The exact claim depends on whether the deceased leaves children ('issue') and/or a parent, a whole-blood sibling, or issue of a whole-blood sibling.

Irrespective of whether there is a will or not, the surviving spouse can make a claim against the estate of the deceased for such financial provision as is determined by the court under the Inheritance (Provision for Family and Dependants) Act 1975.

This article was written by Caroline Wright, a Solicitor in the Family team, and it originally appeared in full in the STEP Journal